Biofuel Tracker: Capacity for Low Carbon Fuel Policies - Assessment through 2018 - UC Davis
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Research Report – UCD-ITS-RR-18-01
Biofuel Tracker: Capacity for Low Carbon Fuel Policies –
Assessment through 2018
January 2018
Julie Witcover
Robert B. Williams
Institute of Transportation Studies ◦ University of California, Davis
1605 Tilia Street ◦ Davis, California 95616
PHONE (530) 752-6548 ◦ FAX (530) 752-6572
www.its.ucdavis.edu
Biofuel Tracker: Capacity for Low Carbon Fuel Policies – Assessment through 2018 Julie Witcover and Rob Williams* Research Report – Institute of Transportation Studies (ITS-Davis) UC Davis January 2018 * Authors are Assistant Project Scientist and Development Engineer, respectively. Correspondence to jwitcover@ucdavis.edu.
Acknowledgments
The authors are grateful to the research team led by (then graduate student) Jeff Kessler, who
conducted the initial survey and follow-up contacts and phone calls, to E2 (Environmental
Entrepreneurs) and especially Mary Solecki for generous sharing of resources on company
status and contacts built through several iterations of its Advanced Biofuel Market reports, as
well as CleanTech for providing its impressive private investment database for our use. We are
indebted to colleagues in and outside UC Davis who reviewed tracking results and major
findings. This project received funding support from the David and Lucile Packard Foundation,
Energy Foundation, National Resources Defense Council, and National Biodiesel Board. The
content remains the authors’ responsibility alone.
iExecutive Summary
Background
This Biofuel Tracker: Capacity for Low Carbon Fuel Policies – Assessment through 2018 report
follows the discontinued annual Advanced Biofuel Market Report produced by E2. This new
report updates information on transportation biofuel production capacity since E2’s final
publication in 2015.
Like its predecessors, the criteria for this report are biofuels assessed by the California Air
Resources Board with a carbon intensity rating at least 50% below that of petroleum-based
reference fuels, and producers in the United States and Canada. Virgin oil biodiesel falls within
the study criteria and is included in the report due to a carbon intensity rating revision due to
changed modeling; it was out of scope in the earlier modeling and excluded from the E2
reports. The focus is liquid biofuels, including dimethyl ether (DME), a liquid at moderate
pressure, and excludes biogas.
The report provides information on market plans for near-term production capacity through
2018. It is neither a prediction nor a forecast of either capacity or actual production levels.
Rather, it is one indication of potential North American production of fuel volume that meets
the California carbon intensity rating cut-off in the next couple of years, given favorable market
conditions and the current policy environment. For commercially emerging technologies and
fuels, production capacity ranges are assessed based on company and media reports, and are
filtered through a subjective evaluation of the likelihood of announced capacity coming online
in the 2018 timeframe. The low end of the production capacity range reflects capacity in which
we have higher confidence: existing capacity plus companies that have shown signs of plans to
move forward on the ground. The high end of the production capacity range includes capacity
from companies that is assessed as less likely: from companies that still face some significant
hurdle (e.g., financing) to meet targets or have not pinned down target dates due to
unfavorable market conditions. Well-established technologies and fuels like biodiesel are
treated separately. In the case of biodiesel, production is determined by policy more than it is
constrained by capacity. Therefore, the focus of this report is on describing the policies and
other industry trends. The report includes information on private and public financing levels
for biofuels, drawing, like the E2 series, on Clean Tech Group’s industry financial data plus
government data, through 2015.
There are some important caveats to the scope of this report. First, carbon intensity ratings are
used with caution. They provide some indicator of a fuel’s eligibility in low carbon regulatory
policies, but carbon impact is not precisely measured and cannot be (as it depends on factors
outside the policy). Furthermore, carbon impact and carbon ratings differ from one program to
another and remains highly uncertain for many feedstock/fuel combinations. Second, although
biofuel innovation and commercialization is occurring beyond North America in ways that are
relevant to the policies, this report focuses on North America for practical reasons and to
iienhance comparison with the earlier reports. Third, any threshold on carbon intensity
reductions may rule out technologies and fuels that can make significant contributions to
carbon reductions, especially if applied to large volumes of fuel.
Highlights
Key Tracking Results
• For commercially emerging fuels
o 2016 capacity is assessed at about 366 million gasoline gallon equivalents
(MMgge) per year.
o The range for 2018 is assessed at about 500 – 1,000 MMgge (the actual tracked
range is 481 – 972 MMgge).
o Most of the growth, and the 2018 gap between low-end capacity and high-end
capacity, is due to recently announced expansion of drop-in hydrocarbon fuel
capacity.
o Tracked volumes are within a range of assessments in other recent studies.
• For the better established fuel, biodiesel
o U.S. capacity exceeds by a considerable margin the 2-billion gallon U.S. fuel
biodiesel/renewable diesel RFS mandate for 2017; in 2016, domestic production
surpassed 1.5 billion gallons of biodiesel a year for the first time.
o Imports can play (and have played) a key role in filling RFS mandates.
• Financing to companies in the industry
o Totaled about $1 billion in 2015 from public and private sources, compared to
$1.3 billion in 2014 (public and private).
o Private financing dominated, and declined by about a quarter over the period
(~$930 million to $775 million).
o Public monies decreased from ~$313 million in 2014 to $234 million in 2015.
The ratio of grants to loan guarantees switched: in 2014, grants constituted
about two-thirds of public funds, while in 2015 loan guarantees amounted to
two-thirds of public funding.
• Compared to findings in the E2 report based on a 2014 assessment, this report found
less planned near-term growth in capacity for cellulosic ethanol and more for drop-in
hydrocarbon fuels. Capacity plans for 2017 totaled 400 – 600 MMgge in our results,
slightly lower than E2 results of 485 – 650 MMgge for the same year. 2
2
The starting point for the research was the E2 company list; the UC Davis team independently researched the
volumes and timing, and the tracking resulted in some companies being added and others being dropped.
iii• Overall, the tracking exercise suggests
o Of in-scope fuels, biodiesel will continue to be the high-volume fuel through
2018. U.S. biodiesel production is dominated by soy; the share from corn oil has
grown over time.
o Drop-in hydrocarbon fuel capacity looks to grow substantially if announced plans
for renewable diesel facilities pan out. The fuel can also be processed for use as
an aviation fuel, and a number of government and airline initiatives support such
activity, albeit still on a small scale.
o For cellulosic ethanol, announced capacity expansion is less from new stand-
alone facilities, and more from adoption of technology that “bolts on” to existing
corn ethanol plants to produce corn fiber ethanol at smaller volumes per facility.
The diffusion and penetration of this this technology is an important factor for
future cellulosic ethanol capacity expansion.
Key Trends
Other than more plans for corn fiber ethanol bolt-ons and renewable diesel, the tracking found
the continuation of some patterns noted by E2 in its report and in similar tracking efforts.
These include industry consolidation, use of existing capital stock (retrofits or add-ons, or
repurposed or co-located facilities), and companies branching out or switching over to other
bio-based products like biochemicals and nutraceuticals. The companies that fell out of scope
had a mix of reasons: pushing production plans beyond the current time horizon for this study
(2018), moving primary efforts overseas, or putting plans on hold due to market conditions. For
the commercially emerging technologies and fuels, several respondents who altered plans cited
an unfavorable financing environment. Among the reasons were lower oil prices, policy
uncertainty, and the slow or difficult commissioning process for several pioneer facilities,
especially for cellulosic ethanol.
The U.S. government continues to support biofuels with an aim of cost-competitive low carbon
fuels produced domestically at volume. Biorefinery support programs have broadened in line
with marketplace shifts to include other bio-based products as potential bridges to biofuels.
Policies like the Renewable Fuel Standard, California’s Low Carbon Fuel Standard, and other
carbon intensity standards continue to provide financial incentives and market pull for biofuels
that meet GHG reduction criteria. The value to fuels from program credit prices remains
uncertain as it is affected by changing market and policy conditions, as well as legal and
implementation issues. Some sources of policy uncertainty may become less salient as the
programs are in place for longer. For example, in 2016 the RFS was on track to issue final
mandates on a more regular timetable, California re-adopted an LCFS that resumed increased
carbon reduction targets after a court-mandated freeze (three years at 1% carbon intensity
reduction), Oregon began implementation of a similar Clean Fuels Program, and Canada
announced a nationwide Clean Fuel Standard to cover transportation fuels and other sectors.
However, in 2017 the approach to setting RFS mandates may shift under the new U.S.
ivadministration, and California’s LCFS received another court ruling that freezes its diesel
standard (at the current 2%) until an environmental impact analysis issue is remedied.
The tracking uncovered a need for a more explicit definition of “effective capacity” at the
facility level, to refer to technically feasible production levels that can be tapped in a very short
time period if conditions were right. Effective capacity may differ from nameplate capacity
under several circumstances, including: during commissioning, when a plant is idle or
repurposed to focus on other products, or even through normal operations due to maintenance
or profitable conditions. Plants sitting idle due to different reasons (unfavorable market
situation, change in ownership, or bankruptcy) may have different “start-up” times to access
the production implied by the facility capacity. Additional capital required for a plant start-up is
important for attaining realistic, near-term per gallon cost assessments – a critical metric for
both private investors and public entities seeking to structure policy incentives to support
commercially viable biofuels. These concepts are not implemented in this report except to the
extent that stated announcements incorporated information like expected ramp-up rates (as
began to occur during the course of the tracking exercise). The topic is important to near-term
tracking, and the effective capacity aspect emerged in recent EPA analysis for annual RFS
mandates – assessing not only capacity but a range of potential production levels.
Key Research Topics
The following topics emerged as important for future research:
• The conditions under which market diversification into bioproducts other than
biofuels should develop critical areas like biomass collection and supply and
pretreatment, shared by biofuels, will hasten biofuel innovation
• The role in emissions reduction of smaller, less expensive innovations that result
in more modest emissions improvements (for current and emerging
technologies)
• The importance and design of adequate sustainability safeguards for market-
based biofuel policies, especially as volumes of biofuels or other bio-based
products scale in a way that increases competition for carbon-emitting resources
(like land), amid uncertainty and disagreements over carbon accounting
methods and results.
vTable of Contents
Acknowledgments............................................................................................................................ i
Executive Summary..........................................................................................................................ii
List of Figures ................................................................................................................................. vii
List of Tables .................................................................................................................................. vii
Introduction .................................................................................................................................... 1
Purpose ....................................................................................................................................... 1
Scope and Methods .................................................................................................................... 1
Key Findings and Key Issues ........................................................................................................ 3
Layout of Report ......................................................................................................................... 5
Industry Overview ........................................................................................................................... 5
Biofuels through a Climate Policy Lens ....................................................................................... 5
Other Tracking Efforts ................................................................................................................. 5
Assessment through 2018 .......................................................................................................... 8
Active Facilities...................................................................................................................... 10
Commercially Nascent Fuels and Technologies (facility-level research) .............................. 10
Biodiesel – a commercially established fuel/technology (industry-level research) ............. 19
US Biomass-based Diesel and the Role of Imports ............................................................... 22
Investment and Costs ................................................................................................................... 23
Capital Costs of Production Facilities ........................................................................................ 24
Fuel Production Cost Estimates ................................................................................................ 26
Policy ............................................................................................................................................. 27
Policies Using Carbon Intensity Ratings .................................................................................... 28
U.S. Renewable Fuel Standard (RFS)..................................................................................... 29
Fuel Carbon Intensity Standards (“Low Carbon” or “Clean” Fuel Policies) .......................... 31
CI Policy Interaction .............................................................................................................. 33
Additional Biofuel Policy Incentives.......................................................................................... 36
Federal Programs .................................................................................................................. 36
State Programs ...................................................................................................................... 36
Policy Uncertainty ..................................................................................................................... 37
Future Directions .......................................................................................................................... 37
Conclusions ................................................................................................................................... 38
References .................................................................................................................................... 41
Appendix ....................................................................................................................................... 46
viList of Figures
Figure 1. Facility Counts by type. “Other” refers to DME. ........................................................... 10
Figure 2. Reasons companies were “out-of-scope” ..................................................................... 11
Figure 3. Fuel production capacity tracking results, compared to E2 (2014) ............................... 12
Figure 4. Tracked fuel capacity results, compared to E2 (2014) report ....................................... 14
Figure 5. Near-term Installed Capacities – Report Comparison ................................................... 18
Figure 6. Near-term Number of Facilities– Report Comparison ................................................... 18
Figure 7. Annual biodiesel production, capacity (EPA registered and installed), and RFS2 volume
mandates ...................................................................................................................................... 20
Figure 8. Feedstock contribution in U.S. biodiesel production, 2009, 2015, 2016. .................... 21
Figure 9. Biomass-based Diesel - Production and Imports (to California and rest of U.S.). ......... 22
Figure 10. Investment Trends and Investments by Type for Biofuel Production Facilities. ......... 24
Figure 11. Biorefinery capital costs; company data and literature values ................................... 25
Figure 12. Biorefinery capital costs and nameplate capacity ....................................................... 25
Figure 13. Biofuel production cost estimates from literature ...................................................... 27
Figure 14. RFS Volume Standards: implemented (columns) and statutory levels (lines)............ 30
Figure 15. CA LCFS alternative fuel transport energy, 2011-2016 .............................................. 31
Figure 16. BC RLCFRR alternative fuel transport energy, 2010-2015 ........................................... 32
Figure 17. OR CFP alternative fuel transport energy, 2016 .......................................................... 32
Figure 18. Energy covered under existing and proposed lifecycle CI standards, recent years ... 33
Figure 19. CI standards in Pacific Coast Collaborative jurisdictions ............................................ 34
Figure 20. State Tax Incentives and Policies ................................................................................. 36
List of Tables
Table 1. Report and Database Comparison, North American Commercially Emerging Biofuels ... 7
Table 2. In-Scope Biofuels – Technology Descriptions ................................................................... 9
Table 3. Key Industry Trends and Questions From Moves to ‘Out-of-Scope’ .............................. 16
Table 4. Installed Capacity Assessment Comparison for North America ..................................... 17
Table 5. CA LCFS and RFS Policy Incentives -- Examples ............................................................... 35
viiIntroduction
Purpose
This report highlights developments in the emerging biofuel industry to aid in the assessment of
near-term biofuel availability. We view the industry and its development through the lens of
climate policy: regulations that set targets for lower carbon-emitting transport fuels compared
to currently dominant petroleum-based fuels. These include the U.S. Renewable Fuel Standard
(RFS) and state-level policies such as California’s Low Carbon Fuel Standard (LCFS) and Oregon’s
Clean Fuels Program (CFP). Such policies drive domestic demand for biofuels and other
alternative fuels.
This is follow-on work to the E2 Advanced Biofuel Market Report (discontinued in 2014), and
adopts its method of surveys supplemented by secondary data. Efforts to track production
activity in emerging biofuel markets have increased. They include reports from the National
Renewable Energy Laboratory’s Survey of Non-Starch Ethanol and Renewable Hydrocarbon
Biofuels Producers, Biofuels Digest’s Advanced Bioeconomy Deployment Report, a report by
the International Renewable Energy Agency, and a Lux report on cellulosic ethanol production
costs (Schwab et al. 2015, Schwab et al. 2016, Lane 2016, IRENA 2016, LUX 2016). 3 Several
organizations maintain online biofuel facility directories, including the International Energy
Agency, market analysts Genscape, and various trade media and trade groups (IEA 2016,
Genscape 2016, EtOH_Mag 2016, Biodiesel_Mag 2016, National_Biodiesel_Board 2015). This
study summarizes the categories of information and methods in many of these sources, and
brings together information from these and other sources to shed light on biofuel supply
developments, financing, and key policy drivers in a publicly available resource. We highlight
issues that biofuel tracking efforts must grapple with, that are key to interpreting findings, ours
and others’.
Scope and Methods
Like its E2 predecessor, this report covers activity by almost 200 liquid biofuel producers and
tracks companies with: a) plans for production facilities in North America, and b) fuel pathways
assessed at the time as achieving at least a 50% reduction in lifecycle fuel carbon intensity
compared to conventional fuel (gasoline and diesel) by the California Air Resources Board
(CARB) for its Low Carbon Fuel Standard (LCFS) program. 4 It covers production activity for
3
The most recent report from NREL surveys 2016 but was not reviewed for this study (Warner et al. 2017).
4
CARB ratings provide a general indicator of fuels’ eligibility in low carbon fuel programs. They are not an absolute
reflection of all low carbon policy approaches, as policies use different methods for rating fuel carbon intensities
1biodiesel, cellulosic ethanol, drop-in biofuels or intermediates (e.g., renewable diesel and
biocrude, respectively), and other emerging technologies (e.g., algae, dimethyl ester). 5
We provide information relevant for assessing potential North American production volumes
for fuels rated as low carbon in the near term, given favorable market conditions and current
policy environment. This means a focus on production capacity for commercially emerging fuels
and technologies. Surveys were used to gather information, and were supplemented using
public information such as media reports, academic reports, and SEC filings. Because biodiesel,
is well established in the marketplace and has large production capacity relative to current
production, the report focuses on key policy drivers of production levels, from publicly available
information, principally government sources.
The report includes an update on financing using data from the Clean Tech Group and online
government sources, 6 public and private investment totals for in-scope companies, and
catalogues the number of state tax incentives and policies. Regarding costs, the tracking activity
gathered capital cost information for some facilities through the survey or public
announcements, and this information is summarized. Fuel production cost estimates for six
operational ethanol plants and from recent techno-economic literature are compared.
Several caveats on the study are important to keep in mind. First, fuel pathways that achieve
less than 50% emissions reductions, and/or that make extensive use of existing processes and
capital stock, when employed at large volumes may play a substantial role in greenhouse gas
(GHG) emission reductions; second, assessments of GHG impact from fuel pathways are very
tied to particular production contexts and methods; the field is still evolving methodologically --
ratings may change or conditions needed to safeguard against unintended consequences of
scaling up production may become better understood. Therefore, uncertainties involved in
current assessments should be weighed in discussions about biofuel use and scale-up of
production and feedstock use. 7 Third, although in-jurisdiction production is often a stated
policy goal, innovations in biofuel technology and production anywhere in the world can drive
biofuel industry development, and help meet U.S. GHG transport policies. Regarding the study
data, information on individual facilities is subject to considerable uncertainty for several
and get different results. Academic estimates on actual greenhouse gas impacts vary and have wide uncertainty
ranges.
5
We do not use the term “advanced” to describe covered biofuels due to lack of agreement on what fuels would
qualify. For example, the US EPA includes sugarcane ethanol and virgin oil as well as the fuels within our scope as
“advanced” fuels for its Renewable Fuel Standard (RFS), fuels excluded from the E2 Advanced Biofuels Market
2014 report because they did not meet the carbon intensity criterion. The ARB carbon intensity modeling and
associated ratings have since changed, and virgin oil biodiesel, which was not in E2’s scope, falls within ours.
6
Trade media recently highlighted errors at USASpending.gov, but pertaining to allocation of funds rather than
total amounts (Lane 2016c).
7
In general, assessments of GHG intensity of transport fuels for policy purposes have been the subject of
considerable academic debate and methods and results vary considerably (see e.g., (Plevin et al. 2014), (Hertwich
2014), (Brandão et al. 2014), (Dale and Kim 2014)). Because biofuel production uses land and only under certain
circumstances results in new carbon sequestration, it has come under intense scrutiny.
2reasons. First, it is primarily self-reported (either through the survey or as announced to the
public and reported in the media), and that we could not always reach the company for direct
confirmation. This is particularly pertinent as regards capital costs, which are necessarily
estimates and projections for facilities that are not yet fully operational or operating. Second,
the market situation is fluid and information about companies should be interpreted
accordingly and not as static or given. This is especially true for fuels with emerging
technologies or markets.
Key Findings and Key Issues
The marketplace for emerging biofuels has continued to change since the 2014 E2 Advanced
Biofuel Market Report. A number of previously tracked companies have moved out of low-
carbon fuels and into other market-viable chemicals that share a similar production platform
(e.g., cosmetics, nutraceuticals, or industrial grade products), been acquired, gone bankrupt, or
put construction plans on hold. Other companies kept fuels in a multiproduct portfolio when
they transitioned toward a focus on chemicals and/or food.
Company assessments of North American biofuel production prospects in 2015 and 2016 were
generally unfavorable for new dedicated stand-alone pioneering facilities. Several companies
with Department of Energy loan guarantees mentioned trouble finding additional private
investment to finish production facility construction. Other companies suspended North
American plant construction or operations to wait for more favorable market conditions or
began looking outside North America for suitable sites for biofuel production due to lower
permitting, construction, and operational costs.
Drop-in renewable diesel and jet fuel dominated additional planned capacity. Stand-alone
cellulosic ethanol facilities have still not fully commissioned. Added cellulosic ethanol capacity
was planned mostly for smaller volumes from corn kernel fiber using bolt-on technologies at
corn ethanol plants. The U.S. Renewable Fuel Standard (RFS) continued to be a major driver for
biodiesel. Higher blend mandates in two categories – the biomass-based diesels mandate,
which sets levels for combined use of biodiesel and renewable diesel, and the advanced fuel
mandate, for which biomass-based diesel fuels are eligible – contributed to increased domestic
production and imports. Domestic biodiesel production grew by more than the increase in the
biomass-based diesel mandate, and combined imports of biodiesel and renewable diesel
continued notable year-on-year growth (61% in 2015, and 45% in 2016).
Uncertainty over returns to North American biofuel investment is considerable due to several
factors. The oil price decrease in 2014 and energy price volatility in general creates an
unfavorable investment climate for new-technology biofuels. Technologies untested at scale
are also still a concern, for cellulosic ethanol especially, where pioneering facilities have faced
commissioning difficulties and delays. Finally, the policy support that emerging biofuels rely on
to expand has also been uncertain. RFS mandates have been revised from legislated levels and
are finalized annually, undermining firm expectations about future use needs. There is
additional uncertainty about how the EPA will implement the rule: there was a significant delay
3in finalizing RFS mandate levels for 2014 (not finalized until late 2015), and while mandate
levels for 2017 were issued in late 2016, there is uncertainty about future implementation
under the new U.S. administration. In addition, a biomass-based diesel blender’s credit expired
at the end of 2015, and it is unclear whether it will be retroactively renewed as has happened in
the past. Balancing uncertainties at the federal level are initiatives elsewhere that promote
biofuels. They include California’s Low Carbon Fuel Standard and similar policies in Oregon and
British Columbia; Canada has announced an intention to develop a national version there that
includes transportation fuels but extends beyond it. The provinces of Ontario and Alberta both
have renewable fuel blending regulations that include criteria on lifecycle GHG intensity
reductions. The number of U.S. states with multiple biofuel policies is also on the rise.
Public and private investment in biofuel production capacity continued a downward trend in
this market environment. Uncertainty has led to more investments that leverage existing
capital stock and multiple product markets to improve the business case. Corn fiber cellulosic
capacity “bolted on” to corn ethanol plants is one example. Corn oil biodiesel facilities
collocated with corn ethanol plants is another. Renewable jet fuel has seen more and different
types of investment. Production and technology companies, airlines, and the government led
by the military have all invested in various aspects critical to the business case: technology
development and scaling, construction of pioneer plants with secured feedstock, and offtake
guarantees. The interest in diversified fuel supply from the military and marketing to those
concerned with climate change for airlines have spurred activity in this mode. The renewable
aerojet industry has also actively engaged with environmentalists to assess and potentially
improve sustainability of fuels, including feedstock sourcing. Small-scale efforts may provide a
conducive environment for honing technologies and sustainability protocols that perhaps could
provide lessons for other fuels or apply at larger scales. While most of the effort to reducing
GHG emissions from aviation is focused on aircraft efficiency, renewable jet fuel currently holds
a small role, is eligible to earn incentives under RFS mandates, and is currently being considered
for inclusion in the CA-LCFS.
The research identified several key issues facing biofuel tracking. First, “effective” production
capacity, distinct from nameplate capacity, must be defined and tracked to understand actual
costs for commercial roll-out of new technologies. Second, techniques must be developed to
properly account for new technologies that build on existing capital stock (e.g., retrofits, bolt-
ons, and co-locations). Third, it is becoming more important for those interested in
commercialization of new biofuel technologies to track and characterize a broader bioindustry
structure, paying attention to associated sectors (e.g., feedstock suppliers enzyme/chemical
producers, technology suppliers) and companies undertaking multiple bioproduct portfolios
with technologies relevant to biofuel production, whether or not the portfolios include
transportation fuels. Finally, it is increasingly clear that the biofuel industry is global in nature,
4and tracking overseas activity in biofuel technology and industry development is critical also to
fulfillment of domestic GHG reduction policies. 8
Layout of Report
The Industry Overview presented next reports tracking results, summarizes other tracking
efforts, and discussed key trends learned from the tracking exercise. Subsequent sections are
on Investment and Costs, Policy, Future Directions, and Conclusions.
Industry Overview
Biofuels through a Climate Policy Lens
This report tracks trends in North American production capacity for biofuels that meet
regulatory requirements for low carbon fuel programs within the region. The U.S. Renewable
Fuel Standard (RFS) and state-level policies such as California’s Low Carbon Fuel Standard (LCFS)
and Oregon’s Clean Fuels Program (CFP) have set ambitious targets during the next decade to
expand the use of fuels rated as low in carbon compared to currently dominant petroleum-
based fuels, and have announced intentions to continue the commitment to low carbon fuels as
part of broader climate policies. Canada recently announced an intention to implement a
nationwide low carbon fuel standard to include transportation fuels, targeting a mid-2019 start.
The policies have generated increased interest in the commercial development of new fuels
rated low enough in carbon and available in sufficient quantity to satisfy the targets. Of
particular interest are biofuels produced using novel processes that hold significant promise for
meeting long-term GHG emission goals. While other fuels are eligible under the GHG programs,
the study focuses on liquid biofuels for two reasons: 1) their importance to near-term policy
compliance because of their relative compatibility with existing fuel delivery infrastructure and
vehicle technologies compared to other alternative fuels; and 2) their perceived importance for
long-run decarbonization of heavy-duty transportation modes.
Other Tracking Efforts
This report is one of a growing number of sources providing information on biofuel market
developments for technologies not yet widely commercially available. Recent tracking of
emerging fuel installed capacity in U.S. or North America includes reports, trade literature, and
8
The tracking methods in this report do not incorporate these issues. Other tracking efforts have touched on
some of them. For example, the E2 report listed companies in related sectors (feedstock producers,
enzyme/chemical producers, related technology companies, and international companies). International activity is
also tracked in databases from the IEA, a recent IRENA report (IRENA 2016), and NREL (2017).
5biofuels databases that sometimes have a broader scope. The U.S. EPA also makes short-run
projections for RFS mandate categories as part of its annual rulemaking process. Some results
are behind a paywall (efforts by BNEF, Lux, Biofuels Digest). Others are in the public domain,
notably NREL’s annual survey report of non-starch alcohol and renewable hydrocarbon
biofuels, and online databases supported by IEA Task 39 and Genscape. We reviewed a number
of these. Table 1 summarizes and compares information categories and features of the
reviewed reports and databases. 9 This UC Davis (UCD) project most closely resembles the NREL
effort in terms of methods and coverage. They differ in terms of focus: ours is on fuel
availability for policy and includes commercially established fuel (biodiesel), financing, and a
summary of tracking issues. NREL’s stated focus is on conversion technologies (including
feedstock) and commercial roll-out. NREL (2017) also includes information on international
facilities and where multiproduct output markets are targeted. A comparison of tracking
results for the emerging technology fuels is presented later in the report.
9
The list is not comprehensive.
6Table 1. Report and Database Comparison, North American Commercially Emerging Biofuels
Installed Commercial Differentiates by Facility Status
Scale Capacity Scale (e.g., (Operational, Idle, Under Technologies Feedstock Categories
Source Fuel Type Method
Projected/ Commercial, pilot, Construction, Planning, Described? for In-Scope Fuels
Current
Proposed demo) etc.)
Non-starch
lignocellulosic (residues
NREL (2015 - (3 (capacity for ethanol and
survey+ & energy crops), algae,
2017) surveys) commercial only) renewable
fats, oils, greases, MSW
hydrocarbons
Non-starch
(operational/under
ethanol, butanol, lignocellulosic, algae,
IRENA (2016) construction and Inventory
renewable waste
planned)
hydrocarbons
First-of-a-kind
Liquid and lignocellulosic, plant oils,
IEA Task 39 commercial scale Dbase
gaseous biofuels sugar molecules
demo, pilot & R&D
Commercial focus lignocellulosic, algae,
Genscape (includes some - Dbase fats, oils, greases, MSW,
demos) biogas
Operational Commercial
EPA 2016 and
Scale (for 2017, with and Cellulosic Biofuel var
2017 RFS * - Commercial only - lignocellulosic, biogas
without consistent (EtOh, biogas) sources
Standards
production)
Commercial focus; Cellulosic
low-to- high-end ethanol,
lignocellulosic, algae,
UCD (2017) installed capacity renewable survey+
fats, oils, greases, MSW
range (includes hydrocarbons,
demos) biodiesel
UNCTAD Capacity listed for var
Idle facilities not indicated only lignocellulosic
(2016) EtOH only sources
Ethanol
Existing, Proposed, Under industry lignocellulosic (residues
Producer EtOH only -
construction dbase & energy crops), MSW
Magazine
The documents may cover other fuels but not capacity data. Shaded rows indicate heavy reliance on announcements for projected capacity. *EPA “Current” is a 6 month to 1
year projection. For 2017 standards, the EPA also presents ranges for cellulosic fuel production. “survey+” indicates facility survey plus other sources. “Dbase” is an online
database.
7Assessment through 2018
The study built on the list of U.S. and Canadian companies profiled in the E2 Advanced Biofuel
Market Report 2014 for in-scope fuel technology pathways (Table 2). We revised the tracking
list on survey responses and information from news reports and company websites. We
identified facilities associated with active companies, meaning those already able to produce
fuels or with credible plans for capacity by 2018.
For fuels that are not yet available at high commercial volumes, we examined developments in
production capacity at facility level to provide an indicator of market response to existing
policies and of near-term domestic production potential. HEFA renewable diesel is included
while relatively technologically developed and in commercial production, as trends in its
commercial expansion are of interest for policy. For each company previously profiled, we
researched updates on assessed capacity using publicly available sources (principally company
websites, trade media, and other tracking reports), then contacted the companies for updates
and insights into the biofuel market to incorporate as possible. Like E2, we assessed company-
projected capacity as “low-end” (likely) or “high-end” (optimistic). Low-end assessments were
assigned to facilities with demonstrated progress towards completion, including some
combination of financing, permitting, location, or other details. Where reported production
capacity seemed ambitious given the current market and the timeframe for operation (e.g.,
lacked a site or financing), we classified capacity as high-end. When the company was credibly
active and within our scope but we were unable to make direct contact, we classified capacity
based on secondary information, and indicate “no-response.”
Biodiesel capacity was not tracked through facility level surveys because the U.S. biodiesel
industry is commercially well established. Moreover, biodiesel capacity does not currently
constrain meeting the principal alternative fuel climate policies, and capacity well exceeds
production. Rather, we drew on secondary data to overview key indicators of the sector such as
trends in domestic biodiesel production, capacity, and imports, as well as relevant RFS
mandates through 2018, which act as a primary driver for levels of U.S. biodiesel use. 10 Carbon-
lowering innovations at facility level would be worth tracking, but lay outside the scope for this
report (see Future Directions, below).
One reason we followed the methods and criteria in the E2 Advanced Biofuel Market Report
2014 closely was to enable more direct comparison of results, since time trends are important
especially for the commercially emerging fuels. Results below include that direct comparison
where possible.
10
Biodiesel data were from the U.S. Energy Information Administration (EIA), the U.S. Environmental Protection
Agency (EPA), the Genscape Biofuels online database, and the National Biodiesel Board company list.
8Table 2. In-Scope Biofuels – Technology Descriptions
Technology Example
Fuel Product Feedstock Description
Class Companies
BlueFire
Acid Hydrolysis: hydrolyze lignocellulosic feedstock using acid solution to simple
Lignocellulose Biochemical
sugars which are then fermented and distilled to ethanol.
Renewables (no
info since 2/2016)
Enzymatic Hydrolysis: Enzymes are used to create simple sugars from cellulose
Lignocellulose Biochemical
and hemicellulose - then fermentation and distillation.
POET-DSM
Ethanol Includes “bolt-on” processing at conventional starch or sugar ethanol facilities
Lignocellulose / where corn kernel fiber or hemicellulose from cane is extracted, hydrolyzed and
Biochemical Edeniq
corn kernel fiber fermented. Can increase overall ethanol yield by several percent. The additional
is cellulosic ethanol.
Thermo- & Gasification-to-synthesis gas followed by gas fermentation in bioreactor: Iogen*,
Lignocellulose Biochemical ethanol.product Lanzatech**
Ethanol or Mixed Alcohols Lignocellulose Thermochemical Gasification-to-synthesis gas-to mixed alcohols or ethanol Enerkem
Hydrogenated esters and fatty esters (HEFA) or Hydrotreated vegetable oil
Renewable Diesel & Vegetable oils (HVO). Current commercial renewable diesel is produced by hydroprocessing REG Geismar,
Physico-chemical
Drop-in or renewable hydrocarbons
Jet and animal fats lipid feedstocks (similar to traditional petroleum hydroprocessing). Neste*
Hydroprocessing can occur in a dedicated facility or co-processed w/ petroleum.
Fulcrum, Red Rock
Gasification-to-synthesis gas-to Fischer Tropsch liquids, i.e., diesel, jet, gasoline
Lignocellulose Thermochemical
hydrocarbons.
Biofuels (subsid. of
Joule), Velocys
Renewable Fast Pyrolysis-to-biocrude followed by hydtrotreatment to renewable
Hydrocarbons (Diesel, hydrocarbons. Business models include co-processing the biocrude at a
Lignocellulose Thermochemical
petroleum refinery to produce low carbon diesel, gasoline, or jet fuels (some
Ensyn
jet, gasoline)
biogenic content in finished product).
Catalytic Cracking (catalytic depolymerisation) to biocrude followed by
Lignocellulose Thermochemical
hydrotreatment.
KiOR (bankrupt)
Renewable Nutrients, CO2 &
Amyris* (main
Hydrocarbons (Diesel, photosynthesis or Synthetic Biology: Engineered microorganisms that can produce novel fuel
Synthetic Biology focus outside
jet, gasoline), existing simple molecules or improve process efficiency
fuels), Joule
Ethanol possible sugars
Transesterification of lipid feedstock into fatty acid methyl ester (FAME) or
Vegetable oils
Biodiesel Physico-chemical mono-alkyl ester product. This is an oxygenated product and not compatible
and animal fats with petro-diesel and jet fuel distribution infrastructure.
Biogas/natural
DME Physico-chemical Methane reformed to methanol then dehydrated to DME Oberon
gas
*Denotes company or production is outside North America.
** Initial focus overseas, not from biomass (1 US bioplant in development).
9Active Facilities
The research identified 231 active biofuel facilities within our scope identified: 180 biodiesel,
and 51 for ethanol, drop-in, and DME combined. The numbers are similar to those in the E2
Advanced Biofuel Market Report 2014 (123 biodiesel, 57 other), except for biodiesel (Figure 1).
E2 excluded 27 facilities dedicated solely to virgin oil biodiesel because they did not meet the
50% GHG emissions cut-off. UCD included this category of fuels because a modeling update in
the California LCFS program shifted the rating to below the 50% cut-off.
30
25
No. of facilities
20
15
Bars omitted
10 for Biodiesel
5
0
Ethanol Drop-In Other Biodiesel
E2 (2014) 27 27 3 123
UCD (2017) 26 23 2 180
UCD % low end 85% 48% 100% 100%
Figure 1. Facility Counts by type. “Other” refers to DME.
The discussion first covers individually tracked facilities, principally ethanol and drop-in fuels,
then proceeds to biodiesel.
Commercially Nascent Fuels and Technologies (facility-level research)
There were 98 emerging fuel (non-biodiesel) facilities on the initial tracking list. The list was
comprehensive and included those that had fallen out of scope in the last assessment (E2 2014)
to give a broader view of industry trends. The direct response rate to the email survey and
follow-up emails and phone calls was 31%, similar to other efforts. For companies that did not
respond directly, we relied on trade reports and other tracking efforts to compile available
information. Forty-five companies (each associated with one facility) were determined to be
out-of-scope, for various reasons (Figure 2). We return to a discussion of out-of-scope
companies later in the section.
1020
15
# of companies
10
5
0
Post-2018 Acquired No info Other Demo On hold
available product closed indefinitely
Figure 2. Reasons companies were “out-of-scope”
Results
This section presents results for the 51 facilities tracked that use commercially emerging
technologies or fuels. 11 Facility production capacity was classed as “high end” (less certain) or
“low end” (more likely)(darker color = low end in Figure 3). In the current uncertain investment
climate and due to trends in companies suspending activity, UCD adopted a conservative
classification. Capacity already in existence or near completion was classed as “low end”; most
future projects were classified as “high end.” Figure 3 indicates results, differentiating between
information confirmed through direct contact with companies (blue section of columns) and
obtained from secondary sources (tan section of columns, and asterisked in legend). In-scope
ethanol capacity was assessed as increasing from 47 MMg/y in 2016 to 113 – 183 MMg/y (low-
to-high-end range) by 2018 (Figure 3). 12 Drop-in fuel capacity was assessed as going from 294
MMg/y to between 354-745 MMg/y in the same period.
11
The company count was 45. Some companies owned multiple facilities, i.e., a demonstration and planned
commercial plant(s) or additional plants gained through acquiring other companies.
12
Dates in the figure refer to the assessed year for this project (UCD) and from E2 (2014).
11800
High-end*
700 Low-end*
High-end
600
Low-end
MMG / yr capacity
500 Total (vol)
400 * Data unconfirmed
by company
300
200
100
0
E2 2015 E2 2017 2016 2017 2018 E2 2015 E2 2017 2016 2017 2018 E2 2015 E2 2017 2016 2017 2018
Ethanol Drop-in Other
High-end* 0 0 22 0 120 279 0 0 0
Low-end* 44 85 96 93 93 93 0 0.11 0.11
High-end 0 33 0 4 48 2 28 0 0 112 0 0 0 0 0
Low-end 97 182 4 14 17 214 319 201 201 261 2 60 2 5 9
Total (vol) 97 215 47 102 183 216 347 294 414 745 2 60 2 5 9
*Data unconfirmed by company
Figure 3. Fuel production capacity tracking results, compared to E2 (2014)
Compared to the E2 report, cellulosic ethanol capacity is assessed as expanding more slowly,
while planned expansion of drop-in fuels capacity is greater. The cellulosic ethanol result
reflects two trends: slow or stalled commissioning in larger facilities, 13 and an uptick in near-
term growth from plans to rollout relatively small volumes of cellulosic ethanol using corn fiber
as a feedstock, and produced at existing corn ethanol plants. 14 The technology “bolts on” to a
corn ethanol plant and shares much of its infrastructure, thereby lowering cost and reducing the
novel processes introduced. The extent to which bolt-on technologies can supply increased
volumes of cellulosic fuels in the near term depends on several still-unsettled issues: length and
timing installation and production ramp-up at individual facilities, average yields at scale,
diffusion rates, and ultimate penetration bolt-on technologies at corn ethanol facilities. For
mid-term availability, key issues include the potential for learning-by-doing to decrease costs
and/or increase production.
13
Abengoa’s 25 MMg/y corn stover ethanol facility in Hugoton, KS was idled due to the company’s bankruptcy. The
asset recently sold in late 2016 Synata Bio. INEOS Bio’s 8 MMg/y green waste ethanol facility in Vero Beach, FL is
up for sale, following technical difficulties at the plant and the company turning away from the ethanol market.
Dupont’s 30 MMg/y corn Iowa stover facility was slated to begin production in 2016, according to an August
company letter to the EPA, and has had issues with feedstock fires. POET’s 25 MMg/y Iowa corn stover facility is in
ramp-up phase, but reportedly not yet hitting a required pace of feedstock processing (Lane 2017).
14
There are several different facilities and licensed technologies involved. Quad County Corn Processors in Iowa
has reportedly generated over 5 MMg of cellulosic ethanol since 2014 using its bolt-on Cellerate technology.
EdeniQ bolt-on technology involves one step that improves corn starch extraction (Cellunator) and a second for
the grinding and processing (Pathway). Corn ethanol producers using the EdeniQ process include: Pacific Ethanol
(producing at its Stockton, CA facility starting in late 2015, and planning installation at a second plant in Madera,
CA); Siouxland Energy started production in early 2017 at its Sioux City, IA facility; Flint Hills Resources has an RFS-
eligible pathway at its Shell Rock, IA plant and has announced an intention to employ EdeniQ technology in other
plants. ACE Ethanol in WI is installing a pilot of the D3MAX bolt-on technology in February 2017, with testing in
March.
12The increased activity for drop-in fuels vis-à-vis the E2 report resulted from plans for a
combination of renewable diesel, jet fuel, and biocrudes. Current commercial renewable diesel,
HEFA (hydrogenated esters and fatty acids) fuel, also called HVO (hydrotreated vegetable oil), is
produced by hydroprocessing lipid feedstocks using a method similar to traditional petroleum
hydroprocessing. Production can occur in dedicated facilities using various proprietary
methods, or in a traditional refinery through co-processing with petroleum feedstock. 15 There
were also several projects to co-locate a renewable diesel facility beside a corn ethanol plant to
use extracted corn oil as a feedstock, more commonly used to produce FAME biodiesel. The
result would be ~3 MMg/yr of production, perhaps supplemented with local waste oils as
feedstock. The technology provider and company behind one of the projects went bankrupt; a
second project was far enough along on construction to expect to begin commissioning within a
few months as of fall 2016.
Renewable diesel can be produced using other technologies as well. Commercial development
is proceeding for thermochemical processes that produce renewable diesel or renewable
gasoline make use of lignocellulosic feedstocks. Pyrolysis produces a crude oil-like intermediate
sometimes called “bio-oil” that can then be refined to a hydrocarbon fuel. 16 Feedstock
gasification followed by Fischer Tropsch reaction produces a hydrocarbon fuel sometimes called
biomass to liquid, or BTL. Companies using these technologies – Ensyn and Fulcrum for
pyrolysis and gasification, respectively – have active production plans targeting transportation
fuel markets. 17 A refinery in Martinez (formerly Tesoro, now Andeavor) is considering co-
processing “bio-crude” (pyrolysis liquid) and petroleum into a diesel product for the California
LCFS market (Lane 2016b).
Conversion technologies used to produce renewable diesel, can, with additional adaptations,
produce jet fuel. Altair Fuels has adapted an idle petroleum refinery in Paramount, CA to a 40
million gallon capacity HEFA renewable fuels plant optimized for jet fuel production. Feedstocks
are inedible vegetable oils and waste fats and oils (Sherbacow 2015). Fulcrum is also primarily
targeting jet fuel as a product. Behind the activity in renewable jet fuel has been partnerships
involving technology providers, U.S. government entities, and airlines for financing, technology
15
The U.S. currently has six dedicated renewable diesel facilities with a combined annual capacity of about 235
million gallons. The largest are Diamond Green Diesel, Norco, LA [~150 MM gpy, from 1.3 billion pounds of fat] and
the REG facility in Geismar, LA [75 MM gpy] (Lane 2016) Diamond Green Diesel is a partnership between a
subsidiary of Valero Energy Corporation and Darling Ingredients. Kern Oil, with a refinery in California, has co-
processed renewable diesel and petroleum diesel in some years, but does not have a dedicated renewable diesel
facility.
16
Bio-oils – pyrolysis oils from biomass feedstock – contain 40-50% oxygen (by weight) and 10-20% water, and are
acidic and unstable (do not store well).
17
Ensyn, building on a process at a 3 MMg/y facility in Ontario that supplies heating oil, has several projects to
supply heating and refinery markets, including a 10 MMg/y facility under construction in Quebec to use a forest
slash feedstock slated for late-2017 commissioning, and a 20 MMg/y retrofit project in Georgia for construction in
mid-2017 and commissioning late 2018. Fulcrum is developing an 11 MMg/y facility using municipal solid waste
(MSW) in Reno, NV, for production by late 2018, plus seven additional plants by 2022.
13development at scale, and off-take agreements. Another hallmark of renewable jet fuel
development has been more active partnerships between airlines and NGOs interested in
developing sustainability protocols, especially for feedstocks, in line with an industry
commitment to reduce GHG emissions substantially this century, under some policy pressure to
do so, especially in Europe. For example, the National Resource Defense Council issues a
periodic Aviation Biofuel Scorecard, and in 2016 received responses from 19 or 29 airlines
surveyed (Hammel 2016).
Although the fuel mix shifted in the UCD assessment from the prior E2 report, overall energy
from emerging fuel capacity in 2017 remained roughly constant, with the important caveat that
in the new assessment more capacity is assessed as “high end.” (Figure 4, which shows
capacities in gallons of gasoline-equivalent [gge], depicts more definite supply as “low end” and
additional capacity added if “high end” volumes come through). The fuel-shifting reflects
market response to key alternative fuel policies that use market-based mechanisms to
encourage lowest-cost compliance with some fuel flexibilities built in (more on this below, in
the Policy section).
1200
MMgge/ Yr capacity
1000
800
600
400
200
0
E2 2015 E2 2017 2016 2017 2018
High-end* 0 0 0 136 331
Low-end* 0 0 135 163 170
High-end 2 89 160 3 159
Low-end 309 485 71 239 311
Total (MMgge) 311 574 366 541 972
*Data unconfirmed by company Units are million gallons gasoline-equivalent
Figure 4. Tracked fuel capacity results, compared to E2 (2014) report
Observed Trends for Emerging Fuels and Technologies
The tracking activity illuminated some industry trends worth noting. First, already described,
was the co-location of new facilities alongside existing ones to share infrastructure and
processes as possible. Examples for cellulosic ethanol include corn kernel fiber bolt-on
technology at corn ethanol plants and corn stover ethanol facilities adjacent to corn ethanol
plants. While outside our scope, sugarcane bagasse ethanol facilities co-located with sugarcane
ethanol plants provide another example and produce fuels eligible for the RFS and state carbon
intensity standard policies. That approach could diffuse through Brazilian ethanol plants more
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